On Wednesday, July 3, the initial public offering (IPO) of steel wire maker Bansal Wire Industries Ltd began with a robust response from retail and non-institutional investors. By the end of the first day, the IPO subscription status was 1.76 times, according to BSE data. The retail investor quota was subscribed 2.47 times, while the non-institutional investor (NII) component was subscribed 2.44 times. One percent of the category is reserved for Qualified Institutional Buyers (QIBs).
The IPO allocates 15% of its shares to NII, 50% to QIB, and 35% to retail investors.
On Tuesday, Bansal Wire Industries announced it had received over ₹223 crore from major investors. The company manufactures and exports steel wire, operating in three main sectors: high carbon steel wire, mild steel wire (low carbon), and stainless steel wire. Bansal Wire plans to expand its market position by adding a new sector of specialty wires through its upcoming Dadri factory.
Bansal Wire IPO Details:
- The IPO is valued at ₹745 crore, comprising a fresh issue of 29,101,562 equity shares. There is no offer-for-sale (OFS) component.
- Following the issuance of equity shares, the company will have a market capitalization of ₹40,078.3 million, with a market cap-to-sales ratio of 1.62 times its FY24 profits. The P/E ratio is 50.8 times based on its FY24 earnings.
With over 3,000 SKUs of high carbon steel, mild steel (low carbon), and stainless steel wires, the company and its subsidiary, Bansal Steel & Power Limited, offer one of India’s largest product portfolios for steel wire. The subsidiary offers around 1,500 SKUs, compared to about 2,000 SKUs offered by the company. Based on these considerations, the IPO receives a “Subscribe – Long Term” recommendation.
Financial Highlights:
- The company has maintained a client retention rate of 64.74% in FY22, 66.06% in FY23, and 68.49% in FY24.
- It sells around 86% of its output domestically and exports the remaining portion, with the US and European wire markets accounting for over 70% of export earnings.
- Revenue CAGR was around 5.9% from FY22 to FY24. For FY24, the EBITDA margin was 6.04%, and the PAT margin was 3.19%, generating a 21.19% and 18.46% return on equity, respectively.
- Using diluted EPS for FY24 (₹6.18), the PE multiple is 41.4x at the higher end of the pricing band, compared to the industry average of 32.72x. The P/BV is 7.72x.
Given these variables, risks, opportunities, and high value, investors may consider subscribing to the issue with a medium- to long-term perspective.
Bansal Wire Industries IPO GMP Today:
The grey market premium (GMP) for Bansal Wire IPO today is +60, indicating a premium of ₹60 in the grey market. The expected listing price is ₹316 per share, 23.44% higher than the IPO price of ₹256, based on the top end of the IPO pricing band and the existing premium on the grey market.
Disclaimer: Investors are advised to consult certified experts before making any investment decisions.
